Allon shares collapse as ambitious CNS study ends in disastrous flop

Two years ago Vancouver-based Allon Therapeutics bet it all on a plan to put its experimental drug davunetide through a key study for progressive supranuclear palsy (PSP). But after borrowing $10 million for the work, the drug flopped, failing both primary endpoints. And in minutes the penny stock was blasted, losing 95% of its value while plunging to a little more than two cents a share.

The Phase II/III study was an ambitious undertaking. Investigators enrolled 313 patients in the placebo-controlled trial, dosing them for a full year. Its failure creates a major predicament. The biotech said it will stop funding research on the drug "at this time." It also said it was planning a strategic review that would include "all options" on its assets, while announcing unspecified plans to start laying off staffers.

PSP is a form of frontotemporal dementia, a progressive, degenerative brain disease related to Alzheimer's. And Allon felt that the neuroprotective drug also had potential in Alzheimer's as well as schizophrenia and Parkinson's. But like so many developers before it--including a lineup of multinationals--Allon failed the pivotal trial.

"This is a very sad day for patients, family members, and caregivers living with PSP because so many of them held out great hope that these results would define a drug that has an impact on their disease," said CEO Gordon McCauley in a statement. "Sadly these results have not fulfilled these hopes but we are deeply grateful to them for their unrelenting support of this study. While this outcome is not at all what we anticipated, we do believe that we designed the correct study and executed that study well."